Are Gas Prices Causing A Suburbian Exodus?

Well, maybe not a mass exodus right now but people are definitely re-thinking their commute time and cost, which may result more people moving closer to work and big cities.  Many times, moving closer to the city means smaller homes, less square feet and less commute time.  However, prices can be higher than in the suburbs.  So, for those looking to buy a home, are you willing to pay a little more for a house to cut down on travel time and commute costs?  That's the question people are asking.  A move like this could be worth an additional $30,000 towards the purchase of a home...

...if you crunch the numbers right.  Here are my calculations on two different scenarios.  Scenario 1:  assume you commute 70 miles a day (round trip) on a car that gets 23 miles per gallon.  Over a 45 week year, you will have driven 15,750 miles at a total cost of $2,736 (at $4 per gallon).  Scenario 2:  assume you commute 12 miles a day (round trip) on a car that gets 23 miles per gallon.  Over a 45 week year, you will have driven 2,700 miles at a total cost of $468 (at $4 per gallon).  Scenario 2 saves you $2,268, which is $189 per month. 

If you move from scenario 1 to scenario 2, you could save an additional $189 per month, which, using a present value calculation with the following factors (annual rate=6%, total periods=360, payment=-189), works out to a value of $30,022 over the life of a mortgage...or in language we can all understand, an extra $30,000 towards the purchase of a home.

++Fuel Prices Shift Math For Life In Far Suburbs [NY Times]
++Present Value Calculator

Comments

[kim]

Great post, Garrett...and if you live close enough to public transportation you can give up your car altogether and save up to another $600.00/month, minus car payment, maintenance and insurance; now that there are options to using a car like the new rent by the hour cars (that include gas) it's possible to do.

[Garrett]

thanks Kim...great points!

[Homes for sale]

Wow, that is an amazing looking house in the pictur. Where did you get it from?

[Smart Equity]

It is high time we start saving money and time by moving closer to work.

[Matt Nixon]

This is a huge issue in my business; we work in the service industry where we have to make trips to customer’s homes. We used to have our employees drive to work first and the go back out and start their regular route for the day. We now route everything from our employee’s homes so they don’t have to travel to the office first. By doing this we have saved close to 3% on our fuel costs.

[Garrett]

Matt, great story! I think we need to rethink how we do things, especially when it comes to our energy consumption. Kudos to you and your team for thinking about new ways to run your business. That move is healthy on the environment and on your P&L.

[Pacific Heights Real Estate]

Really great story. If that's your house then I am incredibly jealous.

[Nexpider]

Wondering it is looks amazing.

[new houses for sale Philippines]

The house looks familiar with me, I think I saw this before, I don't know if in the movie or what, but that house was nice.

Mitch

[Dubai Property]

Wondering it is looks amazing. I really enjoyed what you had to say. Keep going because you definitely bring a new voice to this subject. Not many people would say what youve said and still make it interesting. Well, at least Im interested. Cant wait to see more of this from you.

[Just Shut Up and Buy The House]

Fantastic article and very true. Commuting using mass transit as opposed to using your own vehicle is so important. When my real estate training students talk to their buyers that is one of the main fields of focus they talk about when shopping for a home.

The commute, the gas prices, the wear and tea on the vehicle, car insurance and so on and so forth.

If there is a convenient commuter train or bus that can get the person to work and back they would just have to factor in the cost of the trip, and nine times out of ten they will save money using the commute. Some families can take out that second car altogether depending on their circumstances.

In a greener world that most are striving for today it is definitely a good idea to research your commute first and weigh all the options before committing to a home purchase.

[William Tribe]

The cost of public transport is getting expensive also. Cyclings probably the best option.

[Greenplan]

Great story. Im so glad people recognize that this is happening. We are building way too big and for no reason.

I started a company dedicated to combating needless suburban sprawl- "Greenplan" offering green house plans to people who dont want to build "Mcmansions". www.greenplanhomes.com

We offer the most holistic green house plans on the web- and at affordable prices- but above all, our designs are just smaller, more efficient and cheaper to operate. I would love to hear your comments about what im doing.

[curtis johnson realty]

People nowadays are more practical in terms of buying homes and all. They wanted their place to near their workplace or the school of their kids. This will be less costly because of the cost incurred for transportation and for gas. Well, we really have to be very thrifty because of the kind of economy we have right now. Great article and thanks a lot for sharing it.

[cash advance llc]

renewable energy sources aren't advanced enough to meet energy demands efficiently.

[pretreatment]

Pickens has made a huge bet in this area and is a smart investor with a good track record, so wind power is worth considering investing in. Of course, not all of us own wind farms, but you can find a Green or Socially Responsible Investment Advisor at www.claroconnect.com to help you look at alternative energy funds or more in-depth investments.

[Jonrpatrick]

You know, I got ticked off about gas prices and went out to do something about it - now I don't worry too much. There's a membership club called FillerUp Club that works like Sam's Club or Costco. You buy your gas normally, and monthly you get 50% refunded back to you! It's been up and running since last Spring, and paying Rebates like clockwork. Here's a blog I put some additional information on about it: http://GasHalfPriced.com

[Las Vegas Foreclosures]

It's everyone's choice to move.. Great article.. Keep up!

[Jenny Bridges]

Thats a good way to do it in my opinion!

[Texas Land Sales]

Wow, its great! we can be a help our environment.